Help with your Swedish tax returns—how to handle Sectra redemption shares 2019
Linköping, Sweden, November 18, 2019 – The 2019 Annual General Meeting of the international medical imaging IT and cybersecurity company Sectra (STO: SECT B) resolved to carry out a redemption program and SEK 4.50 per share was distributed to Sectra shareholders in October 2019. According to the general advice issued by the Swedish Tax Agency regarding the redemption program, 98.6% of the acquisition fees for an original Class A or Class B share in Sectra AB should be attributed to remaining shares and 1.4% to redemption shares of the respective class.
In your Swedish tax assessment, a redemption or sale of shares (designated SECT IL A and SECT IL B) is to be declared as a sale of shares on Form K4. The calculation of the acquisition fees for redemption shares can be carried out in one of two ways:
- According to the general advice issued by the Swedish Tax Agency, which entails that you allot a certain portion of the relevant acquisition fees for the original shares to redemption shares.
- Alternatively, the standard rule can be applied if the transaction pertains to Class B redemption shares.
Example based on the general advice issued by the Swedish Tax Agency
A shareholder owns one (1) ordinary Sectra share with an acquisition cost of SEK 100 immediately prior to the share split in October 2019. The acquisition cost corresponds to the total amount paid for the share (including brokerage) less any adjustments for previous events in the company that have impacted the acquisition cost since the purchase of the share.
According to the Swedish Tax Agency’s general advice, 1.4%—corresponding to SEK 1.40 (SEK 100 x 0.014)—is to be allocated as the acquisition cost of the redemption share. The acquisition cost of the remaining share will then be SEK 98.60 (SEK 100–SEK 1.40). If the redemption shares were disposed of (through sale or redemption) at a price of SEK 4.50, the capital gain calculated based on the general advice is SEK 3.10 (SEK 4.50–SEK 1.40).
Example based on the standard rule
Since the Class B redemption shares were traded for a certain period of time, these can be regarded as listed. However, the Class A redemption shares are not regarded as listed and, accordingly, the standard rule cannot be applied to them.
The standard rule entails that the acquisition cost is equal to 20% of the net proceeds for the redeemed or sold redemption shares. This corresponds to an acquisition fee of SEK 0.90 (SEK 4.50 x 0.2) per redemption share redeemed.
If the payment for a Class B redemption share amounted to SEK 4.50 through sale or redemption, calculation using the standard method would generate a capital gain of SEK 3.60 (SEK 4.50–SEK 0.90).
Information published by the Swedish Tax Agency (in Swedish only)